EUR/USD - Another day… another leg higher? Focus on Eurozone GDP
|EUR/USD jumped to a high of 1.1846 on Monday on the back of a broad based USD sell-off even though the 10-year US Treasury yield rose to 2.30% and the US-German 10-yr yield spread improved to 1.76 from the previous day’s print of 1.74.
Eyes Monthly 50-MA
The downward sloping monthly 50-MA is stationed at 1.1870. The monthly 50-MA was last seen in action in August 2014, when it offered support around 1.3390 levels.
Strong EZ GDP to boost EUR’s appeal as growth currency
As discussed here, the EUR has been treated as a growth/risk-on currency this year. The preliminary Q2 GDP report due today at 9:00 GMT is expected to show the Eurozone economy expanded 0.6% q/q and 2.1% in annualised terms. A better-than-expected GDP figure would boost the EUR’s appeal as growth currency and push EUR/USD above the monthly 50-MA level of 1.1870. Further gains depend on the quality of the US personal spending and income report due at 18:00 GMT.
Risk reversal remains flat lined
Yesterday’s rally in the spot was accompanied by a minor uptick in the 25-delta risk reversal from 0.25 to 0.30. However, on a larger scheme of things, risk reversal remains flat lined, which indicates the rally in the EUR could be overdone.
EUR/USD Technical Levels
The spot was last seen trading around 1.1825. At least two consecutive daily closes above 1.1870 [monthly 50-MA] would open doors for a sustained rally to 1.20 and 1.2042 [July 2012 low]. On the downside, support is seen at 1.1765 [5-DMA] and 1.1692 [10-DMA]. Both the averages are sloping upwards hence dips could be short lived. Under 10-DMA, a major support is seen at 1.1613 [July 26 low].
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.